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**Unformatted text preview: **Department of Economics Fall 2009 LeBow College of Business Economics 301 Drexel University Professor Stehr Class 2 Outline 1) Market Equilibrium and shifts in S & D 2) Review of key math concepts 3) Elasticity Shifts in Supply and Demand Ex: Football tickets Lets consider the supply and demand for a regular season game. Suppose that the stadium holds 40,000 fans, and that demand for a regular season game is given by, Find Market equilibrium P and Q Market equilibrium is such that Now suppose that they are holding a playoff game in the same stadium. What happens? Will demand change, supply or both or neither? 1 Suppose the equilibrium price rises to $500 per ticket and the slope of the demand equation is unchanged. Find the equation for the new demand curve. If the price were left at $100, what would the excess demand be? Review of Key Math Concepts Exponents Let a, b, and x denote any real numbers. Then, b a b a x x x + = a a x x- = 1 a a x x 2 2 ) ( = 2 Derivatives Suppose b Ax y = where x and y are variables and A and b are constants. The derivative of y with respect to x, denoted dy/dx, is 1- = b Abx dx dy The derivative of a constant with respect to a variable is zero. For any constant C, = dx dC The derivative dy/dx gives the rate of change of y as x is varied. It therefore also equals y/ x where denotes change in. dy/dx is also the slope of a line where the equation of the line is written y = f(x). Partial Derivatives A partial derivative treats any other variables in the expression as constants. The derivative U/ x gives the rate of change of U as x is varied while y is held constant....

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